Green bonds fund largest ever sub-Saharan solar project

Attractive financing helps Angola harness the power of the sun in a 370MW solar project with substantial Swedish deliveries by Hitachi ABB Powergrids to electrify rural areas and help combat climate change.

Africa's seventh largest nation with 30 million inhabitants and a rapidly growing economy, Angola is still highly dependent on fossil fuels for its electricity generation. A new solar project – the biggest of its kind in sub-Saharan Africa, with seven facilities totalling 370MW – will greatly increase the share of sustainable energy and facilitate the switch to renewable sources.

Almost 1 million solar panels will be manufactured in South Korea, while most equipment and transmission solutions will be shipped from Sweden. To be eligible for support from EKN and SEK, however, the Swedish content of the project had to be larger than what the deliveries from Hitachi ABB totalled. To up the number of Swedish suppliers involved, Hitachi ABB turned to Swedish trading house Elof Hansson.

“We were tasked with identifying and sourcing suitable suppliers who could meet project needs on commercially competitive terms in areas ranging from cables, building structures and furniture to tools, fences, security equipment and meteorological equipment. We expect that some 15–20 Swedish suppliers will deliver products and services to the project,” says Björn Olausson, President of Elof Hansson International.

Benefits the government

Eighty-five percent of the project is financed with an export credit worth 560 million euro with a tenure of 18 years from the Swedish Export Credit Corporation (SEK), guaranteed by EKN and arranged by ING Bank.

Ron Hansen, Managing Director Export Finance at ING Bank, confirms that the Angolan government benefits from the strength of the triple A-backed Swedish export credit system in obtaining terms and conditions that would be nearly impossible to get elsewhere.

In general, projects of this size in developing markets are not possible to finance in a ‘normal’ banking environment.

Ron Hansen, ING Bank

Responsible for structuring the loan and drawing up the documentation, ING Bank also helped to ensure that the wording and clauses of the loan agreement adhered to green loan principles, which made it possible for SEK to include the project in their green issuance.

Business focus

“ING appreciates the business focus and can-do attitude that characterise the cooperation with EKN and SEK.” says Eugène Kock, Director Structured Export Finance at ING Bank.

The EPC contractor behind the project is Portuguese MCA, but the initiative originated with the US renewable energy developer Sun Africa, who turned to ABB Hitachi Power Grids for feasibility studies and possible sourcing of the technical solution including design, engineering and equipment.

The Korean deliveries enabled EKN to reinsure part of its commitment with K-Sure, the country’s export credit agency.

Business in brief

Sector: Solar energy

EPC contractor: MCA

Lead arranger: ING Bank

Financing: 659 million euros, 85 per cent of which is financed by EKN and SEK over 18 years

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